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Pebblebrook Hotel Trust PEB

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Morningstar’s Analysis

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Pebblebrook Reports Negative Third-Quarter EBITDA but Beats Our Estimates on Lower Expenses

Kevin Brown Equity Analyst

Analyst Note

| Kevin Brown |

While Pebblebrook saw another quarter of negative EBITDA, the third-quarter results were slightly ahead of our estimates. Therefore, we don't plan to make any material changes to our $20 fair value estimate for the no-moat company. Occupancy for Pebblebrook's upper upscale portfolio remains very low at 19.5%, down from 87.5% in the third quarter of 2019 though that is an improvement over the 3.3% figure reported in the second quarter of 2020. Average daily rate also declined 17.8%, which led to revenue per available room falling 81.6% year over year that was in line with our 81.4% decline estimate. Where Pebblebrook outperformed our estimates was on the expenses side as same-store operating expenses fell 63.2%. As a result, same-store EBITDA was a $19.2 million shortfall, better than our estimate of a $58.7 million loss in the quarter. Therefore, while an adjusted funds from operations loss of $0.51 is a major decline from a $0.77 gain in the third quarter of 2019, that figure is better than our estimate of a $0.74 loss.

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Company Profile

Business Description

Pebblebrook Hotel Trust currently owns upper-upscale and luxury hotels with 14,013 rooms across 56 hotels in the United States. Pebblebrook acquired LaSalle Hotel Properties, which owned 10,451 rooms across 41 U.S. hotels, in December 2018, the company current Pebblebrook CEO founded in 1998. Pebblebrook's portfolio consists mostly of independent hotels with no brand affiliations, though the combined company does own and operate some hotels under Marriott, Starwood, InterContinental, Hilton, and Hyatt brands.

Contact
4747 Bethesda Avenue, Suite 1100
Bethesda, MD, 20814
T +1 240 507-1300
Sector Real Estate
Industry REIT - Hotel & Motel
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 58

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